All Posts from March 1, 2024

Wildfires in Northern Texas Threaten Refineries, Pipelines; Nutrien’s Borger Plant Still Operational

Ammonia, Featured, Natural Gas, Texas, Urea

Texas emergency crews are battling the worst wildfire in state history that expanded to more than 1 million acres in just four days, threatened refineries and a nuclear weapons plant amid forecasts for several more days of dry, windy weather.

The largest of multiple blazes scorching the Texas Panhandle – the Smokehouse Creek Fire – expanded more than 20-fold in just two days and now covers 1.075 million acres (1,700 square miles), according to the Texas A&M Forest Service. That surpasses the 907,245-acre East Amarillo Complex fire of 2006 that formerly held the record.

“The potential for wildfire activity will increase again for the Plains region Saturday and Sunday due to strong winds and dry fuels,” the A&M service warned in a statement.

The Smokehouse Creek Fire and the Windy Deuce Fire have scorched houses, shut highways and schools, and menaced critical infrastructure including an oil refinery and the Pantex nuclear-weapons facility. The Pantex plant, northeast of Amarillo, evacuated nonessential staff Tuesday night as the blaze rapidly grew.

Natural gas driller Pantera Energy Co. was forced to shut roughly 1% of its production and pipes at one field that suffered fire damage. “We’ll have to replace some surface equipment over the next couple weeks,” Pantera President Jason Herrick told Bloomberg in an interview. “Ours was not too bad.”

According to a map from the National Interagency Fire Center, the Smokehouse Creek fire and the Windy Deuce fire as of Feb. 28 were to the immediate east and west of Borger, Texas, where Nutrien Ltd. operates an ammonia and urea production facility.

“All of our colleagues at Nutrien Borger in Texas are currently safe from the wildfires that constitute the second largest fire in state history,” Nutrien said in a Feb. 29 statement to Green Markets. “We are in regular contact with our colleagues and are doing everything we can to support their safety, our number one priority. The plant remains in operation and undamaged at this time.”

Nutrien confirmed that “several of our colleagues have lost their homes and several others remain engaged in efforts to contain the fire. Our hearts go out to the impacted communities. Nutrien Borger is working to provide aid to the community and we encourage donations to the Red Cross to aid the many thousands of people that have been affected by these fires.”

Phillips 66’s Borger refinery was on alert but still operational late on Feb. 28. The refinery has a crude throughput capacity of 75,000 barrels per day, and a gasoline throughput capacity of 50,000 barrels per day. Earlier on Wednesday, Texas Governor Greg Abbott declared a disaster for 60 counties affected by four separate wildfires.

Tens of thousands of cattle already may have perished and entire ranches have been wiped out, said Texas Agriculture Commissioner Sid Miller. At least one person died due to the blaze, an octogenarian who was trapped in her home, according to multiple media reports.

Utility owner Xcel Energy Inc.’s stock plummeted, erasing almost $1.9 billion of its market cap, after the company disclosed in a Feb. 29 regulatory filing that an unnamed law firm representing property owners affected by the wildfire has asked the company to preserve as evidence a fallen utility pole located near the potential area of origin. Xcel owns Southwestern Public Service Company, which operates in the region.

“We will cooperate with officials while conducting our own investigations to determine the causes of the fires,” an Xcel spokesperson told Bloomberg in an emailed statement.

Anglo Updates on Woodsmith Polyhalite Project; FY2023 Net Profits Plunge 94%

Earnings, England, Featured

Anglo American plc said in a Feb. 22 earnings statement that it continued to make good progress in 2023 on the core infrastructure of its Woodsmith polyhalite project in North Yorkshire, in northeast England, and is working hard to identify “the right partner, structure, and opportunity” to help share the costs of the giant project.

The company in December was reported to be looking for a potential investment partner or partners to share the costs of the project, which some market watchers have put at around $9 billion (GM Jan. 5 p. 1). Anglo has not disclosed a total capital cost figure for Woodsmith. It also took a $1.7 billion write-down on the project in FY2022 (GM Feb. 24, 2023).

Anglo CEO Duncan Wanblad told analysts and investors at a company investor update presentation on Dec. 8 that the partnership thinking was not new and the company “continues at pace to find a partner.”

The company appears to be waiting for the completion of ongoing studies targeted at enhancing the project’s configuration to allow a higher production capacity and more efficient, scalable mining methods over time before it makes a final investment decision.

Wanblad said the completion of the studies and the Full Notice to Proceed (FNTP) Board decision should put Anglo in “a strong position to maximize the value to syndication.”

As previously reported, Anglo expects to submit the Woodsmith project for a Board approval decision on the FNTP in the first half of 2025. Approval is expected to be for a 5 million mt/y operation, but also still defining a clear pathway to 13 million mt/y (GM  Feb. 24, 2023). First product is still expected to be in 2027.

Anglo said it has approved a capital expenditure of $0.9 billion for Woodsmith in FY2024, the bulk of which will continue to be invested on shaft sinking and tunnel boring activities. The $0.9 billion capex for FY2024 is a big chunk of the total company-wide guided capex of $1.2 billion for growth projects for FY2024.

The company expects the capital investment for the Woodsmith project to be around $1 billion for the next few years, which is a step up from the $0.641 billion spent last year.

Anglo reported that the service shaft at Woodsmith is now about 745 meters deep, having reached the targeted depth for 2023, while the production shaft is now at a depth of about 510 meters. Excavation of the three shallow shafts that will provide both ventilation and additional access to the Mineral Transport System (MTS) is complete, while the MTS tunnel has now reached about 27.5 kilometers of the total 37 km length.

Anglo’s net profits plunged by 94% in 2023, to $283 million from $4.51 billion in 2022, on weaker metals and diamond prices. Underlying earnings before interest, taxes, and other items (EBITDA) fell to $9.96 billion from $14.5 billion, in line with analysts’ expectations of $9.95 billion.

The dividend was cut to $1.2 billion in total, or $0.96 per share, down from $2.4 billion, or $1.98, in 2022, on the back of Anglo’s weaker earnings. Wanblad said the group was adopting a “value over volume mindset” to improve returns. “We are systematically reviewing our assets and will take further actions as needed to enhance their competitiveness,” he said.

Anglo’s cut to guidance in December led to the company’s worst one-day share price since the 2008 financial crisis. The company’s market value remains 44% lower than it was in February last year, leading to speculation that a takeover bid, or activist investors seeking to break up the company, could emerge.

Ma’aden Net Profit Slumps 83% in 2023; Approves Phosphate 3 Phase 1 Final Investment Decision

Ammonia, Brazil, Earnings, Featured, Phosphate, Saudi Arabia

Riyadh-based Saudi Arabian Mining Company (Ma’aden) reported an 83% plunge in net profit after zakat and tax, to SAR1.58 billion (approximately $421 million at current exchange rates) in the 12 months ended Dec. 31, 2023, down from SAR9.32 billion for the previous year.

In a filing to the Saudi Stock Exchange, Ma’aden cited a decline in sales as a result of weaker prices for all its products except gold. The net profit result beat an average analysts’ forecast for SAR1.37 billion, however, according to Bloomberg. Sales in 2023 fell by 27%, to SAR29.27 billion from the prior year’s SAR40.28 billion, but also beat market estimates.

The company said FY2023 net profit was also impacted by higher finance costs due to increased borrowing rates and a lower share of profit from joint ventures on the back of lower commodity market prices. It said this was partially offset by improved raw materials costs, higher income from time deposit, and lower income taxes and zakat.

Ma’aden said the decrease in sales was due to prices “normalizing” after spiking on global supply disruption in 2022. But it said the weaker prices were partially offset by higher sales volumes of ammonium phosphate fertilizer, alumina, and gold.

The company reported that phosphate production last year reached a record 9.099 million mt. Production of DAP was up 15%, to 5.899 million mt from 5.151 million mt the previous year. DAP sales volumes grew 14% year-over-year, to 5.945 million mt from 5.201 million mt.

Ammonia production last year was essentially flat versus 2022, at 3.2 million mt, while ammonia sales volumes dipped by 7%, to 1.996 million mt from 2.147 million mt.

Ma’aden said it expects better conditions in FY2024, with more stable markets for phosphates and aluminum in particular.

“The global phosphate market is expected to remain stable in FY2024. Phosphate demand is set to rise due to improved affordability and low inventory in key markets, offset against supply returning to the market throughout the year,” said Ma’aden CEO Robert Wilt in a company earnings statement.

“Ammonia demand is expected to improve, driven by increased phosphate and nitrogen fertilizer production, and met through increased supply from the US and other markets,” he said.

Wilt said Ma’aden has approved the final investment decision for Phase 1 of its ambitious Phosphate 3 project. The CEO indicated last summer (GM June 2, 2023) that the project was “accelerating towards a final investment decision later in 2023.”

Phase 1 is set to add a further 1.5 million mt/y of phosphate fertilizer production capacity by 2026, he said. The company last year had been targeting a 2025 completion.

The first plant in the Phosphate 3 project, a 1.1 million mt/y ammonia plant located at the Ras Al-Khair Industrial City facility on Saudi Arabia’s East Coast, started “official” commercial production in August 2022 (GM Nov. 4, 2022), although the first shipments from the new plant were made in June 2022 (GM June 10, 2022). The ammonia output is currently being used to cover existing sales contracts and merchant sales.

The second phase of the Phosphate 3 project is ultimately targeting an additional 1.5 million mt/y of production capacity, which, if fully realized, will take Ma’aden’s phosphate fertilizer production capability to 9 million mt/y.

Wilt also reported that the completion of the Vale transaction with Manara Minerals Investment Co. remains on track for the first quarter of 2024, subject to international regulatory approvals and customary closing conditions.

Manara Minerals Investment Co., a joint venture between Ma’aden and Saudi’s Public Investment Fund (PIF), in July last year signed a binding agreement to acquire a 10% stake in Brazilian group Vale SA’s Base Metals Ltd. unit, which produces nickel and copper (GM Aug. 4, 2023). The transaction is based on an enterprise value of $26 billion.

Yara Inks Long-Term Green Ammonia Deal from ACME Oman Facility

Ammonia, Featured, Green Ammonia, India

Yara International ASA has agreed to buy ammonia made using solar power from India’s ACME Group, according to Bloomberg. The deal, which took 18 months to negotiate, covers 100,000 mt/y in what may be the world’s first arm’s length contract for renewable ammonia on such a scale, the companies said in a statement.

ACME will supply the commodity from the first phase of its Oman manufacturing project, with an expected start date of 2027.

“The renewable ammonia from Oman will be part of our scalable distribution system, developing a reliable, safe, and cost-efficient supply chain for low emission ammonia across different market segments,” Magnus Ankarstrand, Head of Yara Clean Ammonia, said in a statement. For the Oslo-based company, the 10-year-plus deal “fits our needs very well in terms of a stable supply,” he said during an interview.

Yara wants to become a major player in supplying clean energy. It sees clean ammonia as a solution to the decarbonization of hard-to-abate sectors, such as shipping, power generation, and agriculture.

“The Yara deal becomes an anchor deal for us to kick start our construction activities in Oman,” Ashwani Dudeja, ACME Head of Green Hydrogen and Ammonia, said in a Feb. 29 interview. It also “sets the right tone for the industry because many customers or developers are hesitating in taking the decisions.”

On top of the commercial details, the parties had to deal with the rapidly developing regulatory environment for renewable fuels in Europe, as well as advances in technology, Yara’s Ankarstrand said. Scatec ASA, a Norwegian solar developer, pulled out of discussions last year.

Yara’s clean ammonia unit is the operator of the largest global ammonia network with 15 ships and access to 18 ammonia terminals and multiple production and consumption sites. It is exploring opportunities with Bunker Holding Group to supply clean ammonia as a marine fuel, while also evaluating potential large-scale production projects with CCS in the US for blue ammonia.

The ammonia produced by ACME, which is moving beyond pure solar generation to tap an anticipated boom in hydrogen demand, will comply with the EU renewable fuel of non-biological origin and renewable energy directive requirements, the companies said. Oman, with its sunny skies and proximity to export markets, offers low-cost electricity and funding.

Texas Farmers Sue Synagro Over PFAS

Featured, Texas

Five farmers from Johnson County, Texas, have filed a lawsuit against Maryland-based Synagro Technologies Inc. and its Texas affiliate alleging that Synagro’s biosolids fertilizer was applied to a neighbor’s farm and that it contained high levels of PFAS (per- and polyfluoroalkyl substances) that poisoned the plaintiffs, killed their livestock, polluted their water, and rendered their property worthless.

The plaintiffs claim Synagro’s biosolid fertilizer was produced from sewage sludge that Synagro purchased from the water treatment plant serving the City of Fort Worth, Texas. They say Synagro makes approximately 26,500 tons of fertilizer each year at that location and claims to have approximately 1,000 such contracts with water treatment plants across North America, managing 6.5 million tons of biosolids annually.

The suit, which was filed in the Circuit Court of Baltimore County, Md., alleges that Synagro falsely markets its biosolids fertilizers as safe and organic and failed to warn purchasers of the risks associated with PFAS exposure. PFAS are also known as forever chemicals.

“Similar instances of PFAS poisonings of farms, dairies, and ranches have occurred in several states,” said Public Employees for Environmental Responsibility (PEER) Science Policy Director Kyla Bennett, a scientist and attorney formerly with the US EPA. She noted that Maine has outlawed land application of biosolids after more than 60 farms were found to have unsafe levels of PFAS contamination.

“This lawsuit against Synagro will likely be the first of many,” she said. “Although civil and criminal sanctions at both the state and local levels are available, the PFAS biosolids problem calls for a national solution.”

Bennett said Johnson County, Texas, has also opened a criminal investigation into Synagro over these events. “Unfortunately, EPA has yet to act to protect consumers and farmers from these avoidable toxic exposures,” she said.

Synagro had not responded to inquiries at press time.

FBN – Management Brief

Asia, Europe, Management Briefs, U.S.

FBN on Feb. 22 announced the appointment of Diego Casanello as CEO, effective March 1, 2024. He replaces Interim CEO Devin Lammers who served in that role since November 2023. 

Casanello has more than 30 years of leadership experience in agriculture, most recently as the Managing Partner and CEO of Vidavo Ventures, a venture capital firm. He previously served as CEO of Arysta Life Science Inc. and as COO of UPL Ltd. He spent more than 20 years with BASF, where he ran business units on four continents.

Originally from Argentina, Diego has resided in Asia, South America, North America, and Europe. He now lives with his wife and children in the Research Triangle region of North Carolina. He holds a degree in Business Administration from the University of Hagen in Germany.

Huma® Inc. – Management Brief

Management Briefs, U.S.

Agricultural humic solutions supplier Huma® Inc., Gilbert, Ariz., on Feb. 20 announced several leadership appointments. Fred Nichols has been named Executive Vice President, Global Chief Sales and Marketing Officer. He will continue his head marketing responsibilities while leading the company’s global product sales, addressing strategic staffing needs, and guiding regional growth.

Justin Smith is Executive Vice President, Business Development. Hewill direct company operations in Brazil and Mexico and oversee the Huma Environmental and Turf & Ornamental divisions, along with the management of Tech Additive ingredient solutions for private label and agricultural partners.

Michael Gardner is Director of Huma® Turf & Ornamental. He will transition from his role as Regional Sales Manager to direct global sales and operations for the company’s Turf & Ornamental business, including products from Humas acquisition of global granular fertilizer company Gro-Power Inc., Chino, Calif.

Cory Ritter is Midwest Sales Manager. He will work with retailers and farmers to offer agronomic advice and tailored humic solutions to improve soil and plant health, yields, and return on investment through sustainable, regenerative agricultural solutions. He is lifelong Illinois corn and soybean farmer.

BP Plc – Management Brief

Ammonia, London, Management Briefs

London-based BP Plc has appointed its top liquefied natural gas (LNG) executive, James Cheeseman, to build ammonia trading as demand grows for green fuels, according to Bloomberg, citing the company. Cheeseman has headed up Atlantic LNG trading at BP for the past decade and will start his new job as Vice President for Ammonia Trading on April 1.

Jörg Selbach-Röntgen, CEO of energy trading group MET Germany GmbH, told Bloomberg his firm is also looking into ammonia. “Ammonia might play a role going forward,” he said. “Given the fact MET Group is also located in Asia now — with an office in Singapore — ammonia is an international topic we will be exploring.”

Chemtrade 4Q Income Back to Black

Canada, Earnings

Toronto-based Chemtrade Logistics Income Fund reported fourth-quarter net earnings of C$11.7 million on revenue of $422 million, up from the year-ago negative $11.7 million on revenue of $456.7 million, respectively. Adjusted EBITDA was $84.6 million, down from $104.3 million.

Full-year net earnings climbed 128%, to $249.3 million on revenue of $1.85 billion compared to 2022’s $109.1 million and $1.81 billion, respectively. Adjusted EBITDA was $502.6 million, up from $430.9 million.

 “The fourth quarter represented a successful end to what was another record year for Chemtrade, one in which we set a new high watermark for adjusted EBITDA,” said Chemtrade President and CEO Scott Rook. “More than anything else, these strong results are reflective of the continued strong execution across Chemtrade’s operations, from the plant floor through all levels to our senior leadership.”

Rook said Chemtrade expects another solid year financially in 2024 and reaffirmed the company’s previously issued 2024 adjusted EBITDA guidance of $395-$435 million. “While adjusted EBITDA is expected to be below the record level we achieved in 2023, achieving the mid-point of guidance of $415.0 million would represent the third highest adjusted EBITDA in our history,” he said.

Rook said Chemtrade expects to complete and commission the expansion and upgrade of its Cairo, Ohio, ultrapure sulfuric acid (UPA) facility this year. “This plant will be the first in North America to meet the quality requirements for next generation semiconductor nodes, furthering Chemtrade’s position as the top North American supplier of ultrapure acid to the semiconductor industry,” he said.

“We also expect to make additional progress on other high-return organic growth projects during the year, including in our water solutions business, while remaining disciplined on balanced capital allocation and maintaining a strong balance sheet.,” Rook added. Total cost for the Cairo project was put at $60-$65 million.

Another possible UPA project, one with joint venture partner KPCT Advanced Chemicals and located in Casa Grande, Ariz., remains on hold until it can be assured the project generates an acceptable level of return. Chemtrade said discussions with customers are ongoing and the jv has applied for CHIPS Act funding.

ICL’s FY2023 Earnings, Sales Drop

Brazil, China, Earnings, India, Potash, U.S.

ICL Group Ltd. reported a 70% drop in adjusted net income attributable to shareholders of the company for the year ended Dec. 31, 2023, to $715 million from $2.35 billion the previous year. Diluted adjusted earnings per share were $0.55 versus $1.82 per share the previous year.

FY2023 adjusted EBITDA declined 56%, to $1.75 billion from the year-ago $4.01 billion, while sales fell 25% year-over-year, to $7.54 billion from $10.02 billion.

The company noted “the significant impact” that lower prices, especially for potash, had on the annual EBITDA. The impact was partially offset by lower raw material costs, and also savings and efficiency programs initiated in the fourth quarter.

ICL President and CEO Raviv Zoller described FY2023 as one of challenging market conditions and, in the fourth quarter of the year, resilience in the face of war.

“While we continued to face various operational challenges in the fourth quarter, which were caused by the war, our efforts to minimize disruption and maintain good production levels were successful,” Zoller told analysts at a company earnings call on Feb. 28.

“Additionally, the majority of our employees who had been called up for service have now returned to full-time work at ICL,” he said, noting that the many people called for reserve duty had stretched the company on the maintenance side, and had even caused some loss of production.

Fourth-quarter net income attributable to shareholders fell 66%, to $123 million from $358 million the previous year. The quarter’s diluted adjusted earnings per share were $0.10 versus $0.28 per share the prior year. Fourth-quarter adjusted EBITDA fell 49%, to $357 million, while sales declined 19%, to $1.69 billion.

While the company sees improving demand for 2024, it expects the situation in the Red Sea to remain challenging. “We currently see improving demand in the company’s key end-markets, and, while we expect there will be new and continued challenges in 2024, we are looking forward to achieving our goals for the year, including inorganic growth,” Zoller said.

In the fertilizer sector, Zoller sees market demand strengthening this year as fertilizer prices remain affordable. In addition, he sees soil nutrient deficiency around the world as remaining an issue due to under application of fertilizers for the previous two years. The company noted industry expectations to see global potash demand of more than 68 million mt in 2024.

The Red Sea situation has become a global issue, not just a local issue, Zoller noted. ICL was able to get all of the products it wanted through the Red Sea in the fourth quarter and in the first quarter so far, but Zoller said he does not expect the situation to improve in the next few weeks “until the war settles in one way or another.”

“The overall result is a hike in transportation costs,” he said. “And I think if it continues in the next few weeks, these higher transportation costs will translate into higher product costs.”

ICL reported that it is making a change to its guidance practices “in order to provide greater transparency for its shareholders.” Going forward, the company will be providing guidance for expected potash sales volumes and EBITDA guidance for all of its business segments other than potash, which will be referred to as specialties-driven business segments.

For 2024, the company expects adjusted EBITDA for its specialties-driven segments to be between $0.7-$0.9 billion. ICL expects 2024 potash sales volumes to be between 4.6-4.9 million mt, compared with 4.683 million mt in FY2023. It said fourth-quarter Potash segment EBITDA of $168 million should give a good indication of EBITDA at current prices, and ICL expects every $20 change in the average potash CIF price from current levels to result in a $100 million annual impact to EBITDA.

The Potash segment reported a 34% year-over-year drop in sales, to $2.18 billion from $3.31 billion in FY2022, while EBITDA declined 58%, to $843 million from $1.99 billion. Production was 6% lower, at 4.42 million mt from 2022’s 4.691 million mt. ICL cited operational challenges such as weather and war-related issues in the fourth quarter, as well as on-going geological constraints in Spain.

Sales volumes were up 4% in 2023, however, to 4.683 million mt from the prior year’s 4.499 million mt. The company attributed the increase mainly to increased sales volumes to Europe and China, partially offset by lower sales volumes to India, Brazil, and the US.

The average potash price in the fourth quarter was $345/mt CIF, 1% higher than the third quarter’s average but 42% lower than the $594/mt CIF average for the fourth quarter of 2022.

ICL’s Phosphate Solutions segment posted a 20% drop in sales in 2023, to $2.48 billion from $3.11 billion the previous year, while segment EBITDA declined 43%, to $550 million from $966 million. ICL described the results as “more normalized” after 2022’s price spike.

The Growing Solutions segment, which now includes ICL’s polyhalite mining operation at Boulby, England, reported a 14% drop in sales, to $2.07 billion from the prior year’s $2.42 billion. The segment’s EBITDA slumped 73%, to $119 million from $448 million.

The company said specialty agriculture sales decreased slightly year-over-year due to lower prices, partially offset by an increase in volumes. Turf and ornamental sales also decreased year-over-year.

ICL said weather-related challenges delayed fourth-quarter orders in Brazil, impacting both the quarter and full-year results for the Growing Solutions segment. However, the company said it gained market share in Brazil, with Brazil and China now accounting for approximately 40% of Growing Solutions sales.

Production of polysulfate at Boulby decreased 6% in the fourth quarter, to 238,000 mt, but annual production in 2023 reached 1.009 million mt, which ICL described as a production record. Sales of FertilizerpluS, one of the company’s main polysulfate-based products, decreased last year, however, as higher volumes only partially offset lower prices.

In connection with the company’s fourth-quarter results, ICL’s Board has declared a cash dividend of 4.76 cents, or about $61 million in total. This compares to 13.83 cents, or about $178 million in total, for fourth-quarter 2022. The 2023 dividend will be paid on March 26.

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